BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 302 (Lara) - Claims against the state:  appropriation
          
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          |Version: April 20, 2015         |Policy Vote:                    |
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          |Urgency: Yes                    |Mandate: No                     |
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          |Hearing Date: May 4, 2015       |Consultant: Mark McKenzie       |
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          This bill does not meet the criteria for referral to the  
          Suspense File.  Pursuant to the committee's rules, the Suspense  
          File rule does not apply to the provisions of this bill as  
          judgments and settlement are considered valid obligations of the  
          state.  Additionally, judgments and settlements may have time  
          sensitivity.







          Bill  
          Summary:  SB 302, an urgency measure would appropriate  
          $25,140,683.50 from the General Fund, and $141,250 from the  
          Athletic Commission Fund, to specified departments for the  
          payment of five settlements.  Any funds appropriated in excess  
          of the amounts required for payment of these claims shall revert  
          to the respective funds.


          Fiscal  







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          Impact:  
           One-time appropriation of $24 million in 2015-16 from the  
            General Fund to the Department of General Services (DGS) to  
            pay the settlement in California First, LP v. California  
            Department of General Services, et al.

           One-time appropriation of $106,173,50 in 2015-16 from the  
            General Fund to the Fair Political Practices Commission (FPPC)  
            to pay the settlement in Charles R. "Chuck" Reed, et al. v.  
            Fair Political Practices Commission.

           One-time appropriation of $1,034,510 in 2015-16 from the  
            General Fund to the Department of Justice (DOJ) to pay the  
            settlement in Kevin Marilley, et al. v. California Department  
            of Fish and Game.

           One-time appropriation of $71,250 in 2015-16 from the Athletic  
            Commission Fund to the Department of Consumer Affairs (DCA) to  
            pay the settlement in Sarah Waklee v. California State  
            Athletic Commission, Department of Consumer Affairs.

           One-time appropriation of $70,000 in 2015-16 from the Athletic  
            Commission Fund to the Department of Consumer Affairs (DCA) to  
            pay the settlement in Dwayne Woodward v. California State  
            Athletic Commission, Department of Consumer Affairs.


          Background:  This bill is one of several annual bills carried by the chairs  
          of the Appropriations Committees to provide appropriation  
          authority for legal settlements approved by DOJ and the  
          Department of Finance (DOF). These settlements were entered into  
          lawfully by the state upon advice of counsel (DOJ). They are  
          binding state obligations.


          Proposed Law:  
            This bill would appropriate special fund and General Fund  
          revenues to DOJ and specified state entities to pay the  
          following settlements:

           California First, LP v. California Department of General  
          Services, et al.
           (San Francisco County Superior Court, Case No. CGC10-505436)
          $24 million settlement, payable from the General Fund.








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          In this lawsuit, the prospective buyers of 11 state-owned  
          properties filed a complaint against DGS and its Director on  
          March 10, 2011.  The plaintiffs had won a bid to purchase the  
          state properties for $2.3 billion, and sued to compel the state  
          to proceed with the sale or pay monetary damages and other  
          relief totaling $1 billion.  DGS filed a cross-complaint  
          alleging that the parties' contract had terminated and that the  
          state could therefore not be compelled to complete the sale.   
          The trial commenced in November of 2014 after several failed  
          motions by the state to dismiss the case or reduce the claim  
          amounts, and the parties entered into voluntary mediation.  A  
          settlement was reached on February 19, 2015 after lengthy  
          negotiations.  Under the terms of the settlement, DGS will make  
          a lump-sum payment of $24 million to California First, and all  
          claims by both parties will be released.

           Charles R. "Chuck" Reed, et al. v. Fair Political Practices  
          Commission.
           (Sacramento Superior Court, Case No. 34-2013-80001709)
          $106,173.50 settlement, payable from the General Fund.

          In late 2013, San Jose Police Offers' Association President Jim  
          Unland filed a case against San Jose Mayor Chuck Reed and his  
          pension reform committee before the FPPC, arguing that Reed had  
          violated state law when he redirected $100,000 from his PAC to  
          an independent expenditure group that supported the 2012  
          reelection campaign of City Councilmember Rose Herrera.   
          Existing law, Gov. Code 85501, prohibits candidate controlled  
          committees from funding independent expenditures in support of  
          or opposition to other candidates.  FPPC determined that Reed  
          had violated that law, but concluded that he had done so  
          unintentionally because he was not up for reelection and did not  
          consider himself to be a candidate, and imposed a $1.00 fine  
          (FPPC No. 12/761).


          On December 13, 2013, Reed filed a petition with the Superior  
          Court to appeal the fine, and challenge the decision, alleging  
          that Section 85501 is facially unconstitutional because it  
          suppresses campaign contribution speech.  In March 2014, the  
          court ruled that Reed was a "candidate" under the Political  
          Reform Act, but that Section 85501 is unconstitutional on its  
          face in that it violates public officials' First Amendment  








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          rights to free speech and engagement in the political process.


          As a result of this judgment, Reed demanded that FPPC pay his  
          attorneys' fees and costs pursuant to the Civil Code of  
          Procedure.  Following settlement negotiations with FPPC's  
          counsel, an agreement was reached where Reed agreed to accept a  
          reduced balance of fees amounting to $106,173.50.  FPPC approved  
          the settlement in July 2014.  

           Kevin Marilley, et al. v. California Department of Fish and  
          Game.
           (United States District Court, Northern District of California,  
          Case No.11-cv-2418)
          $1,034,510 settlement, half payable from the General Fund, half  
          payable from the Dungeness Crab Account within the Fish and Game  
          Preservation Fund.

          This case involved a group of commercial fishermen who were not  
          California residents but fished in California waters.  One of  
          these fishermen, Kevin Marilley, filed a class action suit in  
          the United States District Court in May of 2011 against the  
          Director of the California Department of Fish and Game (later  
          appeals were filed against the Director of the Department of  
          Fish and Wildlife), alleging that California's fishing license  
          statutes, which charge nonresident fishermen two to three times  
          more than the fees assessed on resident competitors, are  
          unconstitutional.  The fishermen and the state filed  
          cross-motions for summary judgment.

          The US District Court granted summary judgment in favor of the  
          plaintiffs, finding that the differential fees violate the  
          Privileges and Immunities Clause of Article IV of the US  
          Constitution, and concluding that the state failed to  
          demonstrate a substantial state interest.  On December 10, 2013,  
          the plaintiffs moved for an award of attorney's fees and court  
          costs.  After negotiations, and upon recommendation from the  
          Department of Justice, the Department of Fish and Wildlife  
          accepted the proposed settlement of fees accrued by the  
          plaintiffs though April 18, 2014, in the amount of $1,034,570.   
          The state has filed an appeal in the Ninth Circuit Court of  
          Appeals and the payment of these fees and costs are stayed until  
          that appeal is resolved.  However, in the event that the  
          decision is upheld, prompt payment will be required.  The  








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          Department of Finance approved an appropriation of the  
          settlement amount to be split between the General Fund and the  
          Dungeness Crab Account within the Fish and Game Preservation  
          Fund.

           Sarah Waklee v. California State Athletic Commission, Department  
          of Consumer Affairs.
           (Sacramento County Superior Court, Case No. 2012-00135227)
          $71,250 settlement, payable from the Athletic Commission Fund.

          This lawsuit resulted from an employment dispute.  The complaint  
          was filed by an employee of the State Athletic Commission, Sarah  
          Waklee, who worked for the Commission since 2004, becoming Lead  
          Athletic Inspector in 2007.  Ms. Waklee filed suit in the  
          Sacramento Superior Court on November 5, 2012 against the  
          Department of Consumer Affairs and several other employees of  
          the Commission, alleging preferential treatment, harassment, and  
          gender discrimination.  

          In late 2014, following depositions and upon calculating current  
          and prospective litigation costs, the DCA, in consultation with  
          the Attorney General's office, negotiated and accepted a  
          settlement agreement with Waklee.  The settlement offer included  
          a dismissal of the suit with prejudice; Waklee's resignation  
          from the Commission; and a payment to Waklee in the amount of  
          $95,000.00 on or before June 30, 2015.  DCA was able to absorb  
          $23,750 within its existing spending authority.  The  
          appropriation in this bill will pay the remaining $71,250 from  
          the Athletic Commission Fund.

           Dwayne Woodward v. California State Athletic Commission,  
          Department of Consumer Affairs
           (Los Angeles County Superior Court, Case No.BC487180)
          $70,000 settlement, payable from the Athletic Commission Fund.

          This lawsuit also resulted from an employment dispute.  The  
          complaint was filed by an employee of the State Athletic  
          Commission, Dwayne Woodward, a thirty-year employee who worked  
          for the Commission as an inspector.  Mr. Woodward filed suit in  
          the Los Angeles Superior Court in August of 2012 against DCA and  
          the Commission, alleging, among other things, age  
          discrimination, retaliation, and harassment in violation of the  
          Fair Employment and Housing Act.  









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          Woodward sought a total of $1.9 million in damages, including  
          $750,000 for age discrimination, $750,000 for retaliation,  
          $164,954.24 for lost earnings, $100,000 for attorney fees, and  
          $123,715.68 for three years of future earnings.  After several  
          good-faith negotiations, the parties concluded that it would be  
          in their best interests to settle their disputes to avoid the  
          expense, inconvenience, and uncertainty of a trial.  The January  
          15, 2015 settlement calls for dismissal of the suit with  
          prejudice, and a payment from DCA to the plaintiff in the amount  
          of $70,000 (with $35,000 due by June 30, 2015, ad $35,000 due by  
          July 15, 2015).  This claim is to be paid through an  
          appropriation from the Athletic Commission Fund. 


          Related  
          Legislation:  
           AB 1615 (Gatto), Chap142/2014, appropriated $2.86 million to  
            DOJ for the payment of two settlements.


           AB 234 (Gatto), Chap 449/2013, appropriated $20.7 million to  
            DOJ for the payment of two settlements. 


           SB 371 (De Leon), Chap 9/2013, appropriated $15.6 million to  
            DOJ for the payment of two settlements.




          Proposed Author  
          Amendments:  The author proposes to amend the bill to delete the  
          Marilley claim, and make several technical and conforming  
          changes.  Specifically, the amendments would:
             1.   Strike out lines 37-40 on page 2, and lines 1-3 on page  
               3.


             2.   Strike out lines 20-21 on page 2, and insert:  


                       (b) Twenty-four million one hundred six thousand  
               one hundred seventy three dollars and fifty cents  
               ($24,106,173.50) is hereby








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             3.   On page 2, line 14, after "($70,000)" insert:


                       to the Department of Consumer Affairs


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